Observed Signal · Oct 1, 2026 · Policy Update · Source: Retail Dive · Impact: 2/5 · Sentiment: Negative
US consumer confidence hits 12-year low on inflation fears
US consumer confidence fell to a 12-year low in September 2026, according to the Conference Board, driven by rising fuel prices, higher borrowing costs, and job anxiety. The confidence index dropped 6.7 points to 81.8 from 88.6 in August. Consumers' median inflation expectations for the next 12 months rose to 5.1%, and the share of households expecting higher interest rates surged to 68.4%. New York Fed President John Williams indicated no immediate need for another rate hike, predicting inflation will slow to just above 2% next year and hit the 2% target only by 2028. The survey aligns with the University of Michigan's consumer sentiment index, which also fell to a four-month low. This economic downturn signals reduced consumer spending, which could impact retail and advertising sectors.
This news signals a potential downturn in consumer spending, which could lead to reduced advertising budgets and lower media consumption, impacting the AdTech and media industries. However, it is not a direct industry event.
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Key Takeaways & Evidence Grounding
- Consumer confidence index fell to 81.8 in September 2026, a 12-year low.
- Consumers' median inflation expectations rose to 5.1% for the next 12 months.
- New York Fed President John Williams predicted inflation will not hit 2% until 2028.
- The share of households expecting higher interest rates rose to 68.4%.
- University of Michigan consumer sentiment also fell to a four-month low.
Connected Companies & Entities
1 Entity mapped“Traders cut the odds of a rate hike on Oct. 28 to 47% from 71% on Monday, according to CME Group's FedWatch tool....”
Related Market Signals & Shifts
Recent verified developments and strategic activity across this market segment.
Consumer Confidence Falls Amid Rising Inflation Expectations
Consumer confidence declined for a second straight month in August as Americans grew more pessimistic about jobs, incomes and business conditions, The Conference Board reported. The consumer confidence index fell to 89.4 from 90.2 in July. Survey responses cited rising fuel prices, inflation, the U.S.-Iran conflict and concerns about borrowing costs; most consumers expect higher inflation and anticipate interest rates will rise over the next 12 months. Other surveys (University of Michigan, EY-Parthenon) and macro data (10-year Treasury yield) cited in the report corroborate weakening sentiment, especially among lower- and moderate-income households.
Consumer Sentiment Rises on Signs of Cooling Inflation
Consumer sentiment rose from a record low in June, increasing about 10% as easing hostilities in the Iran war and lower gas prices eased consumer concerns, according to an index from the University of Michigan. One-year inflation expectations fell to 4.6% from 4.8% in May. The Bureau of Economic Analysis reported personal consumption expenditures rose 0.4% in May and 4.1% year-over-year. AAA data shows the national average price for a gallon of regular gasoline fell to $3.90 from $4.49 (about a 15% decline). University of Michigan survey director Joanne Hsu and Navy Federal Credit Union Chief Economist Heather Long cautioned that high prices remain a burden and sentiment remains below pre-war levels.
Consumer Sentiment Rises as Gas Prices Fall
The University of Michigan reported a 9% monthly increase in consumer sentiment on June 15, 2026, breaking a four-month slump after average gasoline prices declined. Joanne Hsu, director of consumer surveys at the University of Michigan, said expectations for personal finances and business conditions improved across demographic groups, with lower-income households showing the largest gains. Despite the uptick, sentiment remains well below pre-war and year-ago levels, and consumers still see substantial economic risks. The article cites AAA and the Bureau of Labor Statistics for recent declines in pump prices and concurrent rises in wholesale and consumer price indices.
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